Maduro seeks to speed up digital payments as Venezuela runs out of cash

Venezuelan President Nicolas Maduro is pressuring banks to introduce digital payment systems as hyperinflation causes persistent cash shortages in the bolivar currency.

Maduro has targeted the public transit system – where roughly three-quarters of all circulating cash is spent – as the first stage of a plan he calls “the digital bolivar.” In January, he asked banks to deliver point-of-sale terminals to the Caracas subway system and bus drivers, said the people, who spoke on the condition of anonymity.

With annual inflation hitting 2,665%, long lines form many mornings outside banks in Caracas as residents seek to withdraw a maximum of 400,000 bolivars – the equivalent of 20 U.S. cents – just to pay round trip transit fare to get to work.

Venezuelans have stopped using cash bolivars for food and many other day-to-day purchases. It would take forty bills of 50,000 bolivars to buy 1 kilo (2.2 lb) of rice. Instead, many use U.S. dollars in cash or debit cards – sometimes backed by U.S.-dollar accounts at local banks.

But many poor do not have bank accounts and services like public transit cannot process digital payments.

In a sign of worsening cash shortages, the central bank on March 5 announced it would begin to issue bills worth 1 million bolivars each. Even that would be worth just a handful of rides.

“Paying transport fares is complicated because there is no cash,” said Marina Ospino, a part-time salesperson and mother of two, as she rode a bus. “And to run an errand, you need to have a fortune.”